| Tokenized money-market funds like the ones offered by BlackRock and Franklin Templeton are a bit of a novelty, designed to appeal to the diehard crypto user. In many cases, there's not much more you can do with them than you can with a traditional one. That may soon be changing. By the end of the year, a subcommittee of the CFTC's Global Markets Advisory Committee — whose members include Citadel, BlackRock and even Bloomberg LP — intends to make recommendations to the full committee on how registered firms can use distributed ledger technology for holding and transferring non-cash collateral. These recommendations are likely to provide a legal and regulatory framework for how market participants can apply existing policies and procedures to support the use of blockchain for non-cash collateral in a manner consistent with the margin requirements of the agency, other US regulators and derivatives clearing organizations. "This will be huge and really important," Caroline Butler, who co-chairs the subcommittee working on the recommendations, said in an interview. "Collateral has become one of the primary use cases and drivers" for tokenization. McKinsey estimates that the total tokenized market — excluding stablecoins — could reach around $2 trillion by 2030, driven by usage in mutual funds, bonds and exchange-traded notes, loans and securitizations, and alternative funds. That's roughly equal to the size of the entire crypto market. Currently, the tokens related to the Franklin fund can be transferred between institutional shareholders on the Stellar blockchain. In June, Franklin began allowing users of its platform to convert USDC stablecoins to dollars to fund their investment in the fund's shares. Prime brokers Hidden Road and FalconX have already begun accepting BlackRock's BUIDL token as collateral. Nearly everyone on Wall Street has been working on tokenization projects: State Street participated in a pilot using distributed ledger technology to automate the calculation of margins and the pledging of related collateral for foreign exchange forward transactions. Citigroup collaborated with Wellington Management and WisdomTree to explore tokenization of private markets. JPMorgan has an app enabling investors to utilize assets as collateral. But much of the activity has focused on tests and proofs of concepts, many of them overseas. Regulatory clarity and new incentives could pave the way for financial giants to roll out more commercial tokenization services in the US. "We are particularly excited about the tokenization space now, because in the last year to 18 months, we've really seen that evolution from proofs of concepts to real use cases," said Butler, who is global head of digital assets at BNY. "There's the massive driver for our clients — institutions. They are really chasing greater utility of assets, how do you get your money to work more for you." | 
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